Hi
Last week I said no matter how fantastic your product or service, poor cash flow management can be the death of a small business.
That seemed to resonate with a few business owners so here are five more ways to keep on top of your cash flow and another chance to get my offer to
prepare your cash flow forecast.
1. Monitor the cash flowing in and out of your business
Having a weekly, monthly and annual cash flow forecast is a vital business tool but only if you use it properly. Having a forecast enables you to track the cash actually flowing in and out of your business and compare it with what
you expected. If you are off-track then you can examine how to getting payments in from customers sooner in the sales cycle, maybe get stage payments and deposits from customers, delay payments to suppliers and so on.
2. Spot the warning signs and act quickly
Peaks and troughs are natural in business (which is why you should monitor
trends as well as actual figures) but if you start to see a continual decline in orders, debtor days increasing or your overdraft slowly increasing then these are the first signs things may be going awry. Act straight away and don't rely on a quick fix (not paying your VAT and PAYE on time is what we describe as a quick fix - it'll catch up with you sooner than you think!). Find out the exact reason more cash is flowing out than in and look for new customers, improve your credit
control, find alternative suppliers, cut your overheads - whatever it takes that is sustainable.
3. Review your spending and costs
Every expense in your business should be challenged. Is it necessary for the business and contributing to getting and keeping customers? Speak to your suppliers regularly, negotiate improved terms,
outsource functions rather than employ staff, downsize your office space, automate systems and processes. Ask yourself 'what could I do if I had to save £x per month?'.
4. Improve your credit control process
Invoice promptly, don't give more credit than you can afford, get deposits and stage payments, make sure you carry out credit
checks on new customers, have robust terms and conditions, follow up regularly, don't be afraid to upset a few bad payers, Don't forget, you are subsiding someone else's business if they don't pay you on time.
5. Speak to your accountant
Your accountant will have a good relationship with most banks and can work with you to
find a solution (if they can't find one who will) to the problem and devise an action plan to improve matters. Some business owners think that alerting their bank to a problem might make it worse, but in fact if the bank can see that the issue is being addressed they are more likely to be supportive. And of course make sure you, and your accountant, know your numbers.
My offer
And if you missed last week's offer of an annual cash flow forecast, for a limited time I will prepare an annual profit and loss and cash flow forecast for you for only £197+VAT (usually £497). This comes with monthly balance sheets to monitor your working capital and as a free bonus with this
offer a ‘what if’ sensitivity analysis with up to four variables.
I have limited capacity to complete these forecasts and so will do them on a first-come-first served basis. You can book yours by calling me (on the number below), emailing me or booking a call with me at www.calendly.com/noelguilford (when the call is booked your slot is secure). I will send you a form to complete with your opening balance sheet (if applicable), sales forecasts and assumptions.
Do it now so you don’t miss out!
Noel Guilford
Noel Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via
email at noel@guilfordaccounting.co.uk or by phone at 
01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out. His forthcoming book 'Know your business numbers' will be published in the autumn.